First American Financial Corporation FAF reported first-quarter 2019 operating income per share of 74 cents, which outperformed the Zacks Consensus Estimate by 7.3%. Moreover, the bottom line improved 4.2% year over year.
The quarter benefited from effective expense management and growth in investment income that helped the company achieve 12.1% pretax title margin.
Behind the Headlines
Operating revenues of $1.3 billion improved 0.5% year over year and beat the Zacks Consensus Estimate by nearly 2%
Net investment income surged 92% to $82.3 million.
Closed title orders declined 12% due to 29% decline in refinance orders and 8% decline in purchase orders.
Average revenue per order increased 7%, driven by higher average fee per file from commercial transactions.
Total expense of $1.2 billion decreased 3.5% year over year, attributable to lower personnel costs, premiums retained by agents, premium taxes and other operating expenses.
First American Financial Corporation Price, Consensus and EPS Surprise
First American Financial Corporation Price, Consensus and EPS Surprise | First American Financial Corporation Quote
Title Insurance and Services: Total revenues decreased 1.1% year over year to $1.3 billion.
Pretax margin expanded 350 bps.
Title open orders declined 10% to 227,800 while Title closed orders declined 13.1% year over year to $150,900.
Specialty Insurance: Total revenues increased 7.8% year over year to $122.2 million.
Pretax margin expanded 590 basis points to 14.6%.
First American exited the quarter with cash and cash equivalents of $1.3 billion, down 8.9% from 2018 end. Notes and contracts payable were $730.9 million, down 0.1% from 2018 end.
First American exited the quarter with stockholders’ equity of $3.9 billion, up 3.6% from 2018 end.
Return on equity was 18.1% in the first quarter.
Cash flow from operations was $34.5 million, down 20% year over year.
First American currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other P&C Insurers
Among other companies in the insurance industry, which have already reported first-quarter earnings, The Travelers Companies, Inc. TRV, The Progressive Corporation’s PGR and RLI Corp. RLI outpaced the respective Zacks Consensus Estimate.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
First American Financial Corporation (FAF) : Free Stock Analysis Report
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
RLI Corp. (RLI) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research